How to spot bad news a’coming
In Uncategorized on 18/07/2010 at 9:26 am
One way is to keep a mental note of which companies are PR-shy. If such a company starts putting out a glossy annual report, talking to the media, its time to expect some not-so -gd news. Take Straits Trading.
This company, while not one I would invest in, is one of my favourite cos because it does not court publicity. So when in April, a glossy annual report came out which attracted this and in May the executive chairman gave an interview to BT, my “sewer mind” (as friend calls it) got suspicious. I was spot-on. Well on 11 May it was annced in its 1Q2010 results
However, in line with its strategy to focus its resources operations on tin, the Group made exceptional impairment provisions of $20.5 million largely in respect of its non-tin resources investments. After these provisions, the Group recorded a net loss before tax of $6.2 million in Q1 2010.
This is 2% of its 2009 reported assets, not that significant but still noteworthy if I were a shareholder. And at the net of tax level, the loss of 10.3 million would have amounted to 7.4% of 2009′s net profits.